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Let's say a customer wants to transfer $400,000 mortgage to CIBC. He has 2 options. & m; r+ l, g( R* v1 X- e+ E# P; s$ I
1. 3-year closed mortage with 3.3% and 3% cash back.8 `' F; w" T8 M- U9 Q: i) J
2. 5-year closed mortgage with posted rate 5.39% and 5% cash back( ~* T( w4 r% ^; [
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Option 1. After 3% cash back, your mortgage amount will become $400,000*0.97=$388,000 with 3.3% interest
$ C+ n, H/ ?' i+ x. I4 ~If you want to payoff your mortgage in 25 years. Monthly PMT $1896.44. The remaining balance is $356,393 after 3 years.: j/ c0 d3 m9 `& T6 C. B/ ]
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Option 2. After 5% cash back, your mortgage amount will become4 R% _: j# U9 o0 G `
$400,000*0.95=$380,000 with 5.39% interest.- H; l% s4 z$ E% `
If you want to payoff your mortagge in 25years. Monthly PMT 2295.21 The remaining balance will be $356,351.50 after 3 years
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6 k) h% [( }! H! h+ o% E7 S0 ]Basically, for the above options, after 3 years, the mortgage remaining balance is similiar.! v+ e* C& [: B
If you choose the 2% cash back with 3.3%, every month you save about $398.77 monthly payment for 3 years. Total roughly saving ($398.77*12*3=$14,355) |
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